Starcom faces life after P&G in Southeast Asia

The industry rumour mill went into overdrive when news of the pitch became public, although an agency source said, “We were sworn to absolute secrecy internally so were surprised when we found out how many people seemed to know about it.”

The sentiment at Starcom prior to the pitch appeared to be that while there were were a couple of things they needed to improve upon, there was nothing major enough to merit P&G moving the entire SEA account - which comprises Singapore, Malaysia, Indonesia, Thailand and Vietnam.

It was also felt that Starcom’s relationship with P&G HQ in Cincinnati was strong enough to weather what it saw as minor problems in Southeast Asia.

Back in July, industry opinion was that Starcom was safe. “Asleep at the wheel’ was the phrase I heard from someone clientside,” said a source from an agency not involved in the pitch. “But no, I don’t think the account will move, it's been there ten years,” he said back then.

But then came the Japan pitch. News that MediaCom had won the business sent waves of panic through Starcom’s ranks and the tide of popular opinion began to turn in MediaCom’s favour.

“P&G don’t hold pitches very often and wouldn’t do so unless they were serious about moving the business,” commented a source last week before the Southeast Asia news was announced. “Sir Martin Sorrell can be very compelling when he’s in wooing mode. If you look at the momentum, like Japan, MediaCom are looking very strong."

Exact billing figures for P&G in Southeast Asia are unknown, but according to Nielsen AdEx, total adspend just for Singapore, Malaysia and Thailand (not including Indonesia or Vietnam) is US$123 million for only five P&G brands including Head and Shoulders, Olay and Pantene.

Potential impact on agency manpower and resources — with MediaCom ramping up and Starcom potentially scaling down — is still hard to gauge, although one agency head offered a very rough ratio of headcount to billings at around 1 person per $4 million.

Starcom is putting a brave face on the loss, buoyed by yesterday’s news they had been awarded Wrigley and Mars’ combined business in the sub-region. Other wins this year for the SMV Group in Southeast Asia include Singapore GP, Uniqlo, Yahoo and the Orang Tua business in Indonesia. Estimates on the Wrigley Mars business worth range from up to $60 million from one source, down to $17 million from another, but how far that will go to plug the P&G-sized gap remains to be seen.

For MediaCom, the challenge is a different one: how it can upgrade its operations and personnel to make the huge change from being a minority P&G media roster partner in the region to its new role as full agency of record.